In short
An FHA loan is a government-insured mortgage that allows credit scores from 500 (with 10% down) and down payments as low as 3.5% at a 580 score. It requires mortgage insurance premium and is for primary residences. It often pairs with down payment assistance.
Reviewed by Scottie Campbell, NMLS #1610726 · Last updated October 18, 2026
What is an FHA loan and how does it work?
An FHA loan is a mortgage insured by the Federal Housing Administration. That insurance lets investors accept lower credit scores and smaller down payments: 3.5% down with a 580 score or higher, or 10% down with a score from 500 to 579. In exchange, you pay mortgage insurance premium (MIP), with an upfront piece at closing and an annual piece in your monthly payment. For many buyers, that trade-off makes owning a home possible years sooner.
Key takeaways
If someone told you your credit score or savings account means you have to wait, I'd like a second look. FHA loans start at a 500 credit score, go as low as 3.5% down at 580, and pair with down payment assistance most banks don't offer. I'm Scottie Campbell, Mortgage Advisor and founder of Waymaker Mortgage Company, and I've been helping families buy homes since 2003. It's never a no. It's always a how.
What an FHA Loan Really Is
An FHA loan is a mortgage insured by the Federal Housing Administration. The government doesn't lend you the money. It insures the loan, and that insurance is what lets the investors behind it accept smaller down payments and more flexible credit than most conventional programs will.
Quite frankly, FHA is one of the most misunderstood tools in this business. Some folks think it's only for people with bad credit. Others think it's a last resort. Neither is true. I've been doing this since 2003, and I've seen FHA help W-2 families, first-time buyers, move-up buyers and people rebuilding after a hard season get into a home years sooner than they thought possible.
The Credit and Down Payment Basics
Here's how the FHA structure works on the credit side:
- 580 and up: down payment as low as 3.5% of the purchase price.
- 500 to 579: FHA is still possible with 10% down.
- 580 and up with down payment assistance: FHA can pair with DPA programs that help cover your down payment and, in some cases, closing costs.
What that means for you is that a score in the 500s is not the end of the conversation. It's never a no. It's always a how. Sometimes the how is buying now with a larger down payment. Sometimes it's a short plan to move your score past 580 so you can use 3.5% down or add assistance. Can't do it now doesn't mean can't do it ever.
Your down payment can also come from a gift from family, which helps a lot of first-time buyers get across the finish line.
Mortgage Insurance: The Trade-Off
Every FHA loan carries mortgage insurance premium, or MIP. It comes in two parts:
- Upfront MIP: a one-time premium at closing, usually rolled into the loan amount instead of paid in cash.
- Annual MIP: an ongoing premium split into your monthly payment.
On many FHA loans, MIP stays for the life of the loan. That's the cost of the flexibility. A lot of my clients use FHA to get in the door, build equity and improve their credit, then look at refinancing into a conventional loan later when it makes sense. That's part of the plan we build together, not a surprise down the road.
FHA vs. Conventional, Side by Side
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Minimum credit score | 500 (10% down), 580 for 3.5% down | No minimum with a Fannie Mae DU approval; 620 if manually underwritten |
| Mortgage insurance | MIP, often for the life of the loan | PMI when under 20% down, removable as equity builds |
| Gift funds | Allowed for the full down payment | Allowed, with some conditions |
| Property | Primary residence; must meet FHA property standards | Primary, second home or investment |
| Often a good fit for | Credit rebuilding, limited savings, higher debt ratios | Stronger credit, plans to remove mortgage insurance |
Neither one wins every time. That's exactly why I run both.
Down Payment Assistance That Works With FHA
This is where Waymaker Mortgage Company gives you access most banks simply don't have. I work with dozens of national, state and local DPA programs that pair with FHA, starting at a 580 credit score. A few examples:
- National: Orion Boost Down Payment Assistance, EQUO DPA, Chenoa Fund, Supreme Lending National DPA, MaxONE, LoanLift, SmartBuy DPA and others.
- Texas statewide: TSAHC Homes for Texas Heroes, TSAHC Home Sweet Texas, TDHCA My First Texas Home, TDHCA My Choice Texas Home and SETH 5 Star Texas Advantage (not available in Travis County).
- Florida and Ohio: Florida Housing programs such as Florida Assist and Florida Hometown Heroes (subject to annual funding), plus OHFA Down Payment Assistance and Ohio Heroes.
DPA availability depends on property location, income limits and loan type, and eligibility is confirmed program by program. I'll match your scenario to the programs that actually fit, and tell you plainly if none of them do.
Why Your File Isn't Stuck at One Desk
At most banks, your FHA file goes to one underwriting desk with one set of rules. If it doesn't fit their box, you're done. I place FHA loans with multiple investor partners, so if one investor's guidelines don't fit your situation, I take your file to one that does. That matters a lot when your credit, income or debt picture has a few wrinkles.
Before you shop for homes, I'll work to get you a Greenlight Approval. We pre-underwrite as much of your file as possible up front, which is the highest level of assurance available before you're under contract. When several buyers want the same house, that can make your FHA offer as strong as cash, and sometimes stronger.
Thinking Past the Rate
Most people walk in asking about rate. Your rate depends on your scenario and the day's market. Reach out and I'll price it for real. But rate is only one piece. My Total Cost Analysis looks at what the loan costs you over the time you actually plan to own the home: MIP, upfront costs, assistance options and whether a future refinance belongs in the plan. From there, I put together your Mortgage Action Plan so you know every step.
My job is to educate and empower you. Your job is to decide.
Let's Talk About Your Situation
I'm based right here in Georgetown, TX, and I'm licensed in Texas, Florida, Pennsylvania and Ohio. When you call Waymaker Mortgage Company, you're talking to the owner of this company. High-tech, high-touch: modern tools to move fast, and a real person who picks up the phone. Feel free to text me, and let's get you rocking and rolling.
Information on this page is general and educational. It is not a commitment to lend or an offer of credit. Programs, guidelines and eligibility change and depend on your full scenario. Waymaker Mortgage Company, NMLS 2440476. Equal Housing Lender.
Quick facts
- Loan type
- Government-insured (FHA)
- Minimum credit score
- 500 (10% down from 500 to 579)
- Minimum down payment
- 3.5% with a 580+ score
- Down payment assistance
- Available from a 580 score; depends on location, income and program
- Mortgage insurance
- Upfront and annual MIP required
- Occupancy
- Primary residence only
Is this loan right for you?
Who it's for
- First-time buyers with limited savings who need a low down payment
- Buyers with credit scores from 500 into the 600s, including those rebuilding after a setback
- W-2 families with higher debt-to-income ratios who need flexible guidelines
- Buyers who want to combine their loan with down payment assistance (580+ credit)
- Move-up buyers who want flexibility on credit or cash to close
Who it may not fit
- Investors or second-home buyers, since FHA is for a primary residence
- Buyers with strong credit and solid savings who may pay less over time with conventional and removable mortgage insurance
Pros and cons
Pros
- Credit scores accepted from 500, with 3.5% down at 580 and above
- Pairs with dozens of national, state and local down payment assistance programs
- Full down payment can come from a family gift
- More flexibility on debt-to-income and past credit issues than many conventional options
- Placed with multiple investor partners, so one desk's rules don't decide your outcome
Trade-offs to weigh
- Mortgage insurance premium is required and often lasts the life of the loan unless you refinance
- The home must meet FHA property standards, which can flag condition issues
- Limited to primary residences
Frequently asked questions
What credit score do I need for an FHA loan?
The minimum is 500. From 500 to 579, FHA requires 10% down. At 580 and above, you can put down as little as 3.5%, and you may also qualify for down payment assistance. If your score is below where you want it, I'll show you a clear plan to improve it. Can't do it now doesn't mean can't do it ever.
How much do I need for a down payment?
As little as 3.5% of the purchase price with a 580+ score, or 10% with a score from 500 to 579. The money can come from your savings, a gift from family, or a down payment assistance program. DPA availability depends on property location, income limits and loan type, and I confirm eligibility program by program.
What is MIP, and will I pay it forever?
MIP is FHA's mortgage insurance premium. There's an upfront premium, usually rolled into the loan, and an annual premium paid monthly. On many FHA loans it stays for the life of the loan. Many of my clients plan to refinance into a conventional loan later once they've built equity and improved their credit, and we map that out in your Mortgage Action Plan.
Is FHA better than conventional for me?
It depends on your credit, savings, debt and how long you'll own the home. FHA tends to fit buyers who need credit or down payment flexibility. Conventional can cost less over time for buyers who can remove mortgage insurance. I run both through a Total Cost Analysis so you can see the difference and decide with confidence.
What are FHA rates right now?
Your rate depends on your scenario and the day's market. Reach out and I'll price it for real. I'll also show you the full cost picture, including MIP and closing costs, so you're comparing the whole loan and not one number.
Can I use FHA if I'm not a first-time buyer?
Yes. FHA isn't limited to first-time buyers. Move-up buyers and people buying again after a setback use it too. The main requirement is that the home will be your primary residence, and the property needs to meet FHA standards.
How fast can I get started?
Feel free to text me or call. We'll talk through your goals, I'll review your credit and income, and we'll work toward a Greenlight Approval so you can shop with a strong offer. You're talking to the owner of this company, and I'm here to serve.
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Last updated October 18, 2026 · Reviewed by Scottie Campbell, NMLS #1610726. This page is educational and not a commitment to lend; program details change — ask for current figures.